Industry of Bangladesh

Prepared by:
Ayesha Siddika Arshi
Lecturer
Southeast Business School
Course- ECO 1124 (Socio-Economic Profile of BD)

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 Industry of Bangladesh

Bangladesh was born in the background of utter industrial backwardness. At the time of her
birth, she was so poor in the field of industry that almost all the industry products that the
required had to imported from abroad. Though she holds the monopoly of jute, leather, and other
raw materials she was obliged both to export jute to other countries and buy from them finished
goods made with her raw materials. This tragic position lasted for years together.

To add to her difficulties, her population was entirely agricultural, inclined towards agriculture.
Her wealthy people, very few in numbers, were inclined towards commerce and had no idea
about industry. Over and above that she lacked those natural facilities which help the growth of
industry. She has no coalfield, no iron mine, no oil deposit and no natural source of power. And
starting with many barriers and a few advantages, Bangladesh has amazed the word by her
industrial progress in less than twenty years.

The need for industrialization in Bangladesh

Bangladesh is an agricultural country. But its agricultural system is undeveloped and production
is low. Unemployment is high due to rapid growth of population. Per capita income and standard
of living are low. It is not possible to solve the economic problems and march towards
development if the economy remains agro-based. Rapid industrialization along with agricultural
development is the key to an over-al1 development of the country. In fact, the developed
counters of the modern world reached their present stage of development through rapid
industrialization. The necessity of industrialization of Bangladesh is discussed below.
1. Rapid Economic Development: In order to make rapid economic development in Bangladesh
what is urgently needed is to develop industries and factories in large numbers and increase
production. It is not possible to have an over-all development of the country only through
agriculture development. Industrial production can be increased quickly and desired amount can
be produced. So, industrialization is a must for attaining rapid economic development.

2. Increase in National Income: For the growth of national income both the agricultural and
industrial sectors have important role to play. The national income of a country cannot be
increased rapidly if it remains dependent on agriculture alone. Since the agricultural system in
Bangladesh is not developed. So, our national income and per capita income need to be increased
through industrial development.

3. Solution of Unemployment Problem: In Bangladesh unemployment problem is increasing

gradually due to high rate of population growth. ‘The problem of disguised unemployment is
being created due to pressure of increased population on agriculture. The scope of providing

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employment for this increasing population in agriculture is limited. Under this circumstance,
through the development of industrial sector other than agriculture job opportunities can be
created for our excess population.

4. Economic Stability: In Bangladesh uncertainty prevails in agricultural production due to

natural calamities like excessive rain, draught, flood tidal bore etc. But such uncertainty does not
prevailing case, of industrial production. So in order to maintain economic stability in our
economy, industrial development is essential. When industrial production increases export
increases. As a result, favorable condition will be created in the field of international trade and
stability will be achieved.

5. Earning of More Foreign Exchange: We need sufficient amount of foreign exchange for the
economic development of our country. Exports will increase and more foreign exchange can be
earned if rapid industrialization takes place in the country. Rapid extension and development of
garment industries in recent year in Bangladesh has increased our foreign exchange earnings
manifold.

6. Reduction of Dependence on Others: Bangladesh imports from foreign countries consumer

goods machinery, transports, raw materials etc. in large quantity: The import cost of these goods
is higher than our export earnings. It is possible to reduce imports through increased industrial
production. This will reduce dependence on others and balance of trade will be favorable. All
developed countries of the world are less dependent on others.

7. Urbanization and Social Development: The standard of living of the people can be raised
through rapid urbanization and enhancement of soc utilities. The rate of urbanization and
enhancement of social utilities Bangladesh can be made through industrialization. Besides,
industrial development is essential to increase the supply of consumer goods for the people
Therefore; the importance of industries in the economy of Bangladesh cannot be over
emphasized. For the rapid economic growth in Bangladesh development of industries is a must.

Inter-dependence of agriculture and industry

Attainment of economic prosperity is not possible with agriculture alone. Simultaneously with
agriculture, the development and extension of industries are essential. Industrial development of
Bangladesh will ensure the attainment of economic prosperity through increase in income,
reduction of unemployment and increase overall development of the standard of living of the
people. In fact like other countries the agricultural and industrial sectors of Bangladesh depend
on each other for their own development. The interdependence of agriculture and industry is
discussed below:

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1. The raw materials of industry are available from agriculture. In Bangladesh, agriculture
supplies the raw materials of jute, tea, sugar, paper and leather industries. So, these industries
can easily be established based on agriculture.
2. For industrial development Bangladesh imports industrial raw-materials and machineries. For
the huge foreign exchange is needed. By exporting various agricultural products, a
substantial amount of foreign currencies can be earned.
3. Sufficient supply of different kinds of agricultural implements, fertilizer, insecticides etc. are
needed for the development and modernization of agriculture in Bangladesh. When industries
producing these inputs are developed sufficient quality of these inputs will be available at
cheaper rate. As a result, agricultural development will be accelerated.
4. In Bangladesh, there is excess labor force in agriculture, so the agricultural holdings are
gradually becoming smaller. Simultaneously the disguised unemployment is taking acute
shape day by day. To overcome such a situation the excess agricultural labor force should be
transferred to other places. Employment opportunities can be created only through
industrialization for additional labor force in agriculture. Only then the pressure of
population on agriculture will be reduced.
5. Development and expansion of industries in the country will help the processing and storing
of agricultural products. As a result, on the one side the wastage or misuse of agriculture
products can be stopped and on the other it will help the cultivators to get reasonable price
for their products.

Characteristics of industry in Bangladesh

Though Bangladesh is an agricultural country,’ industry assumes an important place. But our
industries are not developed. The main characteristics of industry in Bangladesh are discussed
below.
1. The industry in Bangladesh is undeveloped. Industry in our country could not be developed
due to prolong indifference towards it. As a result the contribution of industry to our national
income is only 10 per cent.
2. Three types of industries, viz., large, small and cottage exist side by side in the industrial
sector of Bangladesh.
3. A large number of industries in Bangladesh are agro-based. For example, jute, textile, tea,
sugar, paper and many other small and cottage industries has been developed on the basis of
agricultural production.

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4. Compared to many other developed countries, lower level of technique and technology are
used in our industries. For this the production in industry and the quality of the product is low.
5. There is no basic and heavy industry in the large-scale industrial sector of Bangladesh. Jute,
textile, sugar and paper are all industries of consumer goods.
6. In the past cottage industries of Bangladesh had a good reputation. But at present the existence
of our cottage industries is at stake.
7. In the industrial sector of Bangladesh both private and public ownership exist among jute
textile and one or two other large industries few are in public ownership and few are in private
ownership. Almost all the small and cottage industries at present are running under private
ownership.
8. There is lack of export-oriented industry in Bangladesh. Almost all industries, except jute and
garments, produce goods to meet the internal demand of the country.
9. Export Processing Zones (EPZ) have been established a view to increasing export of industrial
goods and attracting foreign investment in the industrial sector. Industries established in these
areas have been provided with almost all open market facilities. Eight EPZs are presently at
operation across the country. These are Chittagong, Dhaka, Mongla, Ishwardi, Commilla, Uttara,
Adamjee and Karnaphu under BEPZ authority.

Structure of industries in Bangladesh

Three types of industries exist in Bangladesh viz: i) Large scale industries. ii) Small scale
industries and iii) Cottage industries.
1. Large-scale Industries: Industries which produce large quantity of a product by investing
large amount of capital and raw materials are called large-scale industries. Modem technology
and huge capital are used in large scale industries. In manufacturing, large industry will be
deemed to comprise enterprises with either the value (replacement cost) of fixed assets excluding
land and building in excess of Tk. 300 million or with more than 250 workers. For services,
‘large industry’ will correspond to enterprises with either the value (replacement cost) of fixed
assets excluding land and building in excess of Tk. 150 million or with more than 100 workers.
Jute industry, textile industry, sugar industry, paper mills, fertilizer factory, cement industry, iron
and steel industry are examples of large-scale industries in Bangladesh.
2. Small-scale Industries: Industries which invest smaller amount of capital compared to large
industries and engage larger number of labor compared to its capital are called small scale
industries. In manufacturing, small industry will be deemed to comprise enterprises with either
the value (replacement cost) of fixed assets excluding land and building between Tk. 5 million

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and Tk. 100 million, or with between 25 and 99 workers. For services, ‘small industry’ will
correspond to enterprises with either the value (replacement cost) of fixed assets excluding land
and building between Tk. half a million and Tk. 10 million, or with between 10 and 25 workers.
If on one criterion, a firm fall into the ‘small’ category, while it falls into ‘medium’ category
based on the other criterion, the firm will be deemed as in the ‘medium’ category. Production of
small-scale industries is comparatively small. Plastic and nylon industries, soap. Cosmetics,
leather. Glass, matches, ceramics and aluminum are examples of small-scale industries in
Bangladesh. These industries fulfill a larger portion of demand of our people for consumer
goods.
3. Cottage Industries: In Bangladesh the industries which are generally conducted in a family
environment with few labors, less amount of capital and easily available raw materials are called
cottage industries. The small amount of capital and labor required in such. Industries are in
almost all cases, supplied by the members of the family. The use of electricity is almost non-
existent and the technique of production is old in such industries. The cottage industries of
Bangladesh earned good reputation in the past. The notable cottage industries of Bangladesh are
handmade textiles, pottery, bamboo and cane factory, biri factory, copper and brass industry,
shell etc.

Importance of small and cottage industries of Bangladesh

In Bangladesh cultivable land is limited and large-scale industries are undeveloped. Therefore, to
increase production and employment in the country the importance of small and cottage
industries is very high. The importance of small and cottage industries in Bangladesh is
discussed below.
1. Solution of Unemployment Problem: At present about one-third of the labor force in
Bangladeshis unemployed. If small and cottage industries are developed there will be scope for
permanent employment of the educated and semi-educated persons. This will also create scope
for subsidiary employment and increased income for the cultivators.
2. Employment for Women: About half of the population in Bangladesh is women. This large
number of women should be involved in the economic activities of the country. If cottage
industries are developed scope of employment for women will increase and income of the family
will rise.
3. Reduction of Pressure of Population in Agriculture: Employment should be increased
through development of small and cottage industries. The pressure of increased population on
agriculture will then be transferred to these industries.

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4. Use of Indigenous Raw Materials: Varieties of raw materials like jute, tea, leather bamboo
cane, wood etc. are available in Bangladesh. The production and income of the country will
increase through use of these raw materials in the small and cottage industries.
5. Growth of Rural Economy: For the socio-economic development of the rural areas a larger
number of small and cottage industries should be established. The income of the rural people and
their standard of living will thus be enhanced.
6. Solution of the Problem of Capital: The per capita income and saving are less in
Bangladesh. As a result, there is scarcity of capital in large scale industries of the country.
Therefore, it is easier to develop less capital-intensive industries like cottage industries.
7. Saving Foreign Exchange: In case of small and cottage industries it is not required to import
heavy machinery and raw materials from abroad. Foreign exchange saved can be utilized in other
development work.
8. Supplementary to Large-scale Industries: The goods which cannot be produced in large-
scale industries are produced in cottage industries. Therefore, cottage industries are
supplementary to largescale industries.
9. Balanced Economic Development: In Bangladesh de development activities are centered
mainly in urban areas as the large-scale industries are established there. The small and cottage
industries should be expanded in the rural areas for a balanced economic development in the
country.
10. Balanced Distribution of Resources: The low-income group can take pan in the
establishment of industries if small-and cottage industries are developed. As a result, income of
the poor will in increase and the resource of the society will be distributed more equitably.
11. Preservation of National Tradition and Industrial Skill: The people of Bangladesh
possess an old famous tradition of culture and skill of industrial art. Our national tradition and
skill of industrial art can be preserved through development of age-old cottage industries of the
country.
So, under the back-drop of present socio-economic condition the- importance of small and
cottage industry in Bangladesh is very high. But in the interest of overall industrialization of the
country the development of largescale industries should continue.

Measures for industrial development in Bangladesh

The importance of industrial development for the economic growth of Bangladesh is enormous.
The following measures are required for industrial development in the country. –

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1. Government Initiative and Patronization: Government initiative and patronization is
necessary for industrial development. Few large and essential industries which cannot be
established under private initiative should develop under public ownership. Proper
government cooperation should extend for the establishment of other industries under private
initiative. A policy for establishment of industries under private and foreign initiative has
been adopted presently in the country. This will help to accelerate industrial development in
the country.
2. Increasing Supply of Industrial Capital: Industries cannot be established in the country
due to lack of capital. So, savings and capital formation he increased. Arrangements should
be made -to provide industrial loans easier terms from Shilpa Bank and other financial
institutions of the c and also from foreign countries, Priority should be given to those
industries which can start producing quickly.
3. Establishment of Industries Based on Available Raw Materials: Those industries which
can use domestic raw materials should be established Domestic raw materials are-used in
industries like jute, tea, leather, paper, sugar, fertilizer etc. and preference should be given in
the establishment 1histries in the country’ which use domestic raw-materials.
4. Establishment of Export-oriented Industries: The industries whose products have high
demand in the foreign market should be established. This will on the one hand extend
industrial insertion and on the ocher. Will increase export earnings. From this point of view,
industries producing garments hosiery products, chemical fertilizer, electrical goods, leather
have bright prospects.
5. Importance in Developing Small Industries: Small industries require less capital and it can
employ more labor compared to large industries. So, in our country as capital is scarce and
labor is surplus small industries should be established in large numbers. This will remove
unemployment and industrial development will not be hampered due to scarcity of capital.
6. Technical Knowledge and Efficient Labor: Efficient labor with high technical knowledge
must be created through impairing technical education and training in the country. As result
production in the industries will rise and cost will decrease. Produced goods will then be
enriched both in quality and standard.
7. Development of Power and Mineral Resources: The speed. Of industrial growth
particularly depends on the sufficient supply of power and mineral resources. The
development of power resources including electricity and survey of mineral resources like
oil. Coal, limestone. Gas etc. should continue in the future in order to accelerate industrial
development in the country.
8. To Earn More’ Foreign Exchange: Huge amount of foreign exchange is needed to establish
industries and factories. It is possible to earn more foreign exchange through increasing our

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 exports. With these necessary raw materials, machinery etc. required for industries can he
imported.
9. Development of Transport and Communication: The developed transport and
communication system accelerates industrial development. So, our railways, roads,
waterways, airways and different media of communication should be developed and
extended. It will then he easier to transport raw materials produced goods and labor. As a
result, industries and factories will crop up in different place of the country.
10. Agricultural Development: In order to develop industries in Bangladesh. Development of
agriculturist necessary. This is because raw materials lot industries will be easily available if
agricu1tur is developed. Besides market for industrial products will be extended if income of
the cultivators increases.
11. Political Stability: Industrial development is accelerated if political stability, peace and
discipline’ exist in the country. So, in order to have continued production and growth of
industries law and order situation should be maintained and political stability is needed.
Along with this labor unrest should also be removed.
12. Establishing Heavy Industries: Heavy industries producing equipment machineries,
chemical products etc. are essential for the speed industrialization of Bangladesh. So, various
types of heavy industries should be installed.
13. Formulation of Proper Tax Policy: The existing tax policies of the country exert sufficient
influence on industrialization. In the interest of industrialization of our country appropriate
tax policy should be formulated in order to encourage private initiatives. Moreover, it is
necessary to see that the tax policy can help the creation of investable funds.
14. Creation of Market for Industrial Goods Abroad: For industrialization the market for the
industrial goods should be expanded. To this end appropriate steps should be taken for
creation of demand for our industrial products in foreign markets. If market in abroad for the
industrial products are expanded. New industrial units will grow up in the country.
15. Research in Industrial Concern: For accelerating the process of development of industries,
research elating to industry should be encouraged. If there are research facilities in the areas
of ago-based and export-oriented industrial ventures, reduction of the loss in industries
development of the quality of production etc., the expansion of industries in the country will
be enhanced.
On the whole, it can be said that necessary resources and environment for development of
industries exist in Bangladesh. But proper planning and an effective industrial policy are needed
in this respect.

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